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16.
SUCCEED OR FAIL?
”I always fly on one airline specifically because of their brand.
Anywhere they fly, I choose them. And, I wish they flew to all of
my destinations -- I trust them and feel safe and to me that's
more important than price and times”. Nicole Andre, Teacher
“I develop brand loyalty [to an airline] because they have satisfied
me. The question does not arise whether they get me to my
destination on time. If I do not have brand loyalty then naturally I
am price conscious person”. Gopinath, Proprietor, Geaar Electrics
“As a brand professional, I may be biased. But I've been flying on
Singapore Airlines for the past 8 years. The only time I don't is
when I do not have a choice”. Jui Hong Teoh, Brand Director,
Phische/Company, Kuala Lumpur, Malaysia

17.
SUCCEED OR FAIL?
SOURCE : The 2011 Barcelona European Academic Conference
The Impact of Price Perception on Customer Loyalty in the Airline Context

18.
SUCCEED OR FAIL?
SOURCE : African Journal of Business Management Vol.5 (11),
Effects of promotion on relationship quality and customer loyalty in the airline industry

19.
SUCCEED OR FAIL?
SOURCE : African Journal of Business Management Vol.5 (11),
Effects of promotion on relationship quality and customer loyalty in the airline industry

22.
SUCCEED OR FAIL?
SOURCE : (May 2011) American Express Global Customer
Service barometer
Stat: In a positive economy, 70% of Americans are willing to spend
an average of 13% more with companies they believe provide
excellent customer service – up from 9% last year
Stat: 60% believe businesses have not increased their focus on
providing good customer service. That number is up from 55% last
year. Among this group 26% actually think companies are paying
less attention to service.
Stat: 78% of consumers have bailed on a transaction or not made
an intended purchase because of poor customer service.
Stat: 78% of consumers have bailed on a transaction or not made
an intended purchase because of poor customer service.

24.
Why Priceline’s Web House Failed?
Major issues:
 Nature of product
 There's an incentive for an airline or hotel to sell off
unfilled seats or rooms at the last minute, because they're
"perishable."
 if a seat on a particular flight isn't filled, or a hotel room on
a particular night isn't used, the opportunity to sell them
at any price is lost forever.
 You can't put them in inventory until you find a customer

25.
Why Priceline’s Web House Failed?
Major issues:
 Price flexibility
 filling a seat or a bed uses capacity that is already
paid for. Therefore, the cost of adding a customer is
negligible.
 In contrast, with groceries, there are costs for each
unit related to manufacturing, processing, shipping,
and maintaining inventory that must be covered.

26.
Why Priceline’s Web House Failed?
Major issues:
 flexibility to charge different
customers different prices
 Airlines can offer a lower fare to one customer who is
willing to make last-minute travel plans, without
cutting prices to others
 But There is little flexibility manufactured items (You
can sell day-old bread at a discount, but there's no
such thing as day-old gasoline or week-old laundry
detergent)

27.
Why Priceline’s Web House Failed?
Major issues:
 difference between commodity
products and branded goods
 Priceline wants customers whose primary concern is price.
For them the product is a commodity
 But WebHouse depended on the participation of brand-name
packaged-goods manufacturers, which viewed this sort of
permanent discounting as a dangerous liability for their
brands
 So the target packaged-goods marketers for WebHouse
weren't as flexible on pricing as Priceline's suppliers

28.
Evaluate Action & Approach
 The Web can't compress physical labor and other fixed costs; all it
can do is make marketing and other information-intensive
processes more efficient..
 There must be benefits for both buyers and sellers to change the
way they do business. Self-interest has to be part of the system
 Middlemen will stay in business as long as they can provide
benefits to both sides. At a minimum they must match the right
buyer with the right seller (like eBay Inc.)